Tag Archives: management consulting

What’s Really Wrong with Non-Profits?

You may have been fortunate enough to have missed Rush Limbaugh’s angry tirade last week against the non-profit sector and the “lazy idiots” and “rapists” who fill its ranks.

It’s disturbing to think there are people out there – millions of people — who tune into this buffoon on purpose, and share his views and are infected by his hysteria.

What’s even stranger is that — though I am loath to admit it — Rush got me thinking.

Having worked in the non-profit sector (as an educator) and for the non-profit sector (as a consultant) for most of my adult life, I have my own ideas about what’s really wrong with non-profits.

Here is my top-ten list. I won’t pretend that this list of troubles is exhaustive, and I admit up front that these are sweeping statements. My aim is simply to gather my thoughts and, if I’m lucky, start a conversation.

1. Many non-profits are unable to say what they are really about, or confuse their programs with their core mission.

2. Non-profits that begin from small, inspired efforts have a hard time figuring out how big they should grow, how small they should stay, or how to right-size themselves.

3. Many non-profits are founded by a charismatic leader, and remain captive to his or her charisma; but to flourish, the non-profit may require another organizational model.

4. Non-profits don’t do a great job of capturing knowledge, turning knowledge into assets, and sharing knowledge across the organization or with other organizations engaged in the same work; but they should.

5. People come into the non-profit organization inspired and ready to change the world, and become (at best) competent managers.

6. Many non-profits believe managers with corporate skill sets or consultants versed in management theory can create greater organizational efficiencies; but they too often simply don’t get the culture of the non-profit organization.

7. Non-profits lack the entrepreneurial audacity of social entrepreneurs, and tend to be risk averse.

8. For the sake of being inclusive and making sure everybody has a say, non-profits will often forgo the best ideas and the smartest choices.

9. Many non-profit organizations confuse capacity with resources, and resources with funding.

10. Non-profits tend to be captive to their history, because so many non-profits were formed as a solution to a particular problem, or were built in a single great effort, and it’s hard to move beyond that founding moment.

I wonder if my list resonates with the experiences of others. I wonder, too, what’s missing from it, and which non-profit organizations, in your view, really and consistently get it right.

A brief reply to Starbucks’ Jonathan M.

After I wrote about the Taylorism in Starbucks new “lean thinking” program the other day, I sent my post to the Investor Relations and Press Relations contacts listed on the Starbucks website and asked them to pass it along to “Vice President of Lean Thinking” Scott Heydon and CEO Howard Schultz. I doubted that would happen; but I thought the company might respond with a prepared statement about Lean Management, and from it I could learn a little more about what Starbucks is really trying to accomplish. And maybe, I thought, I might goad somebody at Starbucks into a conversation or exchange about Taylorism.

That was naïve, or presumptuous; in any case, I was wrong. Apparently neither department found anything in my post deserving a response – I guess Starbucks doesn’t consider my blog a form of press coverage and doesn’t think anything I say could ever affect their stock price — so they forwarded my email, with a link to my post, to Customer Relations.

About a week later, this reply, from a certain “Jonathan M.,” arrived:

Hello,
I would first like to apologize for my delay in getting back to you. I truly appreciate your patience. We have been very busy recently and I’m sorry that’s caused you to wait so long for my response.
I read your entire article.
To be completely honest with you, I really liked it. Having worked with the Lean team myself (this is true), some of the things you said really struck a chord with me. I’m glad to pass along what you said to the people in our company who make these decisions.
To speak directly to what you said in your article:
This is a diverse company. The thousands of hard working people who make up this company harbor a wide range of ideas and principles they bring to the table when it comes to business. This is a point we pride ourselves on.
I listened to and fully understand your criticisms of the Lean program.
It does make a difference you shared your feedback because we do have channels in place to affect change in our company when our customers let us know that’s what they want.
Our business, like anything else in life, is, simply put, not an exact science. We’re always looking for ways to improve. We have a responsibility to our shareholders, customers, and employees to do this.
Lean has helped us in many ways to do what we do more efficiently, but, if you have criticisms for Lean, then we’re open to that too.
I hope you feel this e-mail has spoken to the concerns you raised in your article. If not (or in any case) feel free to write back and let me know. In closing, I’d like to mention the anecdote you ended your article on, the one about the employees giving directions in New York, was well used in making your point.
Warm Regards,
Jonathan M.
Customer Relations
Starbucks Coffee Company
800 23-LATTE (235-2883)
Monday through Friday, 5AM to 6PM (PST)
p.s. I’d really like to know how my response met your needs; click here if you’d be willing to share your thoughts in a brief survey.

Let’s put last things first, Jonathan. It seems only appropriate, because we find ourselves in a preposterous situation. Here you are, having to respond not to a usual customer complaint – my coffee was cold, the Gents was dirty, the barista was rude – but to a blog post that is ultimately about the difficulty of instituting a social science or a scientific approach to the social. And you get it. “Our business,” you write, “like anything else in life, is, simply put, not an exact science.” No, your business is not an exact science, and no business is or, I would add, should be. But you can’t really expand on that thought or dwell on it; you can’t really explore what that thought might mean when it comes to Scott Heydon and his Taylorist pursuits: the stopwatches, the spaghetti diagrams, the pretensions to knowledge about the right ratio of motion to work. Though you admit that some of my points “struck a chord” with you, and you appreciate my use of anecdote, and you seem to have a philosophical spirit, you, Jonathan M., have a regimen to follow, a Customer Relations protocol, and you do your best to follow it.

Which brings me to the last thing you mention, in the post-script to your letter: the request that I fill out a survey. Looks like you almost forgot to ask! Thank goodness for the post-script. Apparently there is no science to letter writing either. We always leave something out, always forget to say something, always have an after-thought, or a regret; it is amazing we can send email all day, and not be consumed by remorse or always embarrassed by the things we forget to mention. I nearly am, every day, every time I write, but I manage to soldier on. I guess all writing is like that; maybe that makes writing like life, or life like writing. But then look at your “p.s.”: it seems like a post-script, an after-thought, a little accident or addition, but I strongly suspect it is the least accidental thing in your response: it’s clearly from a Starbucks template or a Customer Relations protocol. (And I wonder if you or the people who instituted the protocol came up with the clever device of lowercase “p.s.,” to make it seem all the more casual?)

How can I be so certain that your post-script is not a genuine afterthought, but part of a corporate protocol? Because a couple of days after you responded to me, I received this response, from a certain “Liz B.”

Hello Louis,
Thank you so much for taking the time to write to us. I have apssed along your feedback as requested.
I want you to know that we take feedback from our loyal customers seriously. Because you know better than anyone else what you want from Starbucks, I will share this with the appropriate department here in our corporate office.
We have made a promise to our customers to provide outstanding products and service. I know that this is a primary reason why you visit Starbucks and I understand how disappointing it is when we let you down.
Thank you so much Louis, for giving us the opportunity to improve what we do.
If you have any further questions or concerns that I was unable to address, please feel free to let me know.
Thanks again,
Liz B.
Customer Relations
Starbucks Coffee Company
800 23-LATTE (235-2883)
Monday through Friday, 5AM to 6PM (PST)
Share your ideas at http://www.mystarbucksidea.com
p.s. I’d really like to know how my response met your needs; click here if you’d be willing to share your thoughts in a brief survey.

I guess Investor Relations and Press Relations didn’t bother coordinating before they forwarded my link to Customer Relations. It seems odd that in a company like yours, dedicated, as you and Liz B. both say, to continuous improvement, you wouldn’t have some more efficient way of coordinating your responses to incoming mail. Apparently you folks could use a little of Mr. Heydon’s Taylorism right there on the frontlines of Customer Relations. Too much motion, not enough work! Maybe when Heydon is done with the baristas he can turn his attention to that little tangle.

But unlike Liz B., who makes it clear that she is only a front for people within the company who have opinions and make decisions, you are struggling mightily here to say something – anything – within the silly confines of this Starbucks protocol, and you really do seem inclined to serious conversation. But a brief survey isn’t going to do it, or even allow me to say whether your “response met my needs.” My needs? I want to have a conversation about the tension between “science” and the “social,” and I want to know how and why a company like yours becomes captive to Taylorism, quasi-Japanese management theories, and other bad ideas. And the only way to do that is for you to put the Customer Relations protocol aside, and have a real conversation. We could do that if you would provide me with a little more information about how to reach you — like a last name, for starters, and a real telephone number, not an 800 number that ends with LATTE (I seriously doubt that’s your direct extension, and that you share an extension with Liz B.), and maybe some assurance that we can resolve these thorny issues without involving, say, Howard Schultz or Scott Heydon, or any of the other “people in [your] company who make these decisions.”

I don’t mean to disparage you or not take you seriously. You say you are acquainted with the Lean program; you even add, as if I would doubt you, “this is true” — which of course makes me doubt you. And if I read you right, you want to indicate that you are not to be counted among the program’s big boosters. The problem is, it doesn’t much matter that Starbucks “is a diverse company” or that “the thousands of hard working people who make up this company harbor a wide range of ideas and principles they bring to the table when it comes to business.” Maybe this is a point of “pride,” but it really doesn’t affect how Starbucks goes to business, and it feels a little like the disingenuous use of the word “partner” to describe a barista: phony empowerment.

After all, the only “ideas and principles” that matter to the future of your company are those being advanced by the people who have the power to advance them; everybody can “bring” their ideas to “the table,” but only a few people get a seat. And that’s the trouble, in my view: those few very powerful people are currently espousing some very bad ideas (which is why I — naively — thought Investor Relations might take an interest in my comments). Bad ideas, and bad in a couple of senses: bad for the coffee business, because they mistake the running of coffeehouses for the serving of fast food; and bad in another, more important sense, because Taylorism, even when it’s dressed up as fancy imported “thinking” from Japan, is a pernicious doctrine. Given the historical record, I might go so far as to say that it’s an inhumane and downright evil doctrine, a part of the intellectual and historical legacy of the twentieth century with which we all have to grapple daily and against which we can all struggle by ignoring its protocols. Work alone will not make us free.

Management in your mocha, a Taylorist in your tea

Back in the early spring of 2008, I wrote about Howard Schultz’s plan to shut down all Starbucks retail stores for a day-long training exercise. Apparently the Starbucks CEO was convinced that his sagging stock price must somehow be the fault of his employees, or at least could be improved if his employees were only better trained in the Starbucks way.

It was only a passing reference. I was half-seriously wondering if Schultz’s decision had inspired Chrysler’s Bob Nardelli, in a caffeine-deprived moment, to write a clumsy email announcing that he’d be shutting down Chrysler’s plants for a full month in the summer of 2008. We now know how all that turned out. Nardelli was trying to save a sinking ship, and couldn’t. Fiat now controls Chrysler; Marchionne has supplanted Nardelli. And Starbucks? Schultz is still in charge; and the company’s fortunes seem to have improved, but only a little. Starbucks was able to beat analysts’ expectations for the third quarter, largely through cost-cutting measures.

And management is once again going back to the baristas, whose performance at the counter has come under fresh scrutiny. That’s because a big part of this new cost-cutting approach has to do with making coffee service at Starbucks more efficient. A front-page story in the Wall Street Journal the other day focused on Starbucks use of Japanese “lean” management techniques, applying the sorts of “scientific” management approaches in their coffee shops one usually finds on manufacturing floors.

The new emphasis at Starbucks on making their business “lean” is inspired by manufacturing improvements at Toyota, and it all comes down to reducing the amount of time baristas spend going through the motions of getting you coffee: “Motion and work are two different things,” says Starbucks’ Scott Heydon. “Thirty percent of the partners’ time” — partners is a word Starbucks uses to describe its counter-help – “is motion, the walking, reaching, bending.”

(Heydon styles himself the “Vice President of Lean Thinking,” and I suppose that makes for a fun business card. But whenever someone has a title like that, odds are he works at a vastly over-managed company that has lost sight of its core business – or at least has mistaken the business of management for management of the business.)

Of course, another word for “lean thinking,” as Heydon practices it, is Taylorism. There’s really nothing all that Japanese about it. Management teams travel to Starbucks locations around the country, armed with a stopwatch and a Mr. Potato Head doll. (I’m not making this up.) They teach the virtue of efficiency by asking store managers to assemble the Mr. Potato Head doll, and then to improve on their own performance by reducing the ratio of motion to work.

The Taylorists then apply the same tests to the fetching of coffee or the grinding of beans; they draw “spaghetti diagrams” to document confused movements behind the counter or divigations across the shop floor; and they prescribe new, more efficient coordinations of action.

The objective of these rites and mysteries, we are told, is to free up time for the baristas to “interact with customers and improve the Starbucks experience.” But that’s obviously management double-speak; the objective here is to sell more coffee and coffee drinks and other Starbucks stuff, faster than ever before, and the baristas know it. Maybe you can do that by “interacting” with customers; but one barista from Minneapolis just thinks Mr. Heydon and the Taylorists plan to turn the workers into “robots” and “the café into a factory.” That’s not a bad way of putting it. After all, the most efficient Starbucks would be a Starbucks free of slackers behind the counter – an Automat, with espresso drinks served up by mechanized routine and kiosks on the floor hawking Starbucks swag.

It’s clear that some very powerful people at Starbucks decided a while back that the coffee business is really the fast-food business. In so doing they lost sight of, or consciously jettisoned, some basic truths about coffee and cafes. The most important of these is that coffee is a social beverage. You don’t need to go to Vienna or study the history of coffeehouses to understand this; just drive out to the suburbs, where very often the Starbucks is the only place in town – or in the strip mall – where people can plan to meet.

The Taylorist approach to coffee preparation and service makes much more sense if you are serving coffee at a drive-up window. It does for coffee what the fast food joints did for the meal – strip it of its sociability and make it something to be consumed on the go. That’s not exactly conducive to making the coffee shop a place where people want to gather. And if you go this route, you have to assume that all of your customers are going to be Taylorist in their pursuit of coffee – that, for them, coffee is a fix. The very idea is offensive.

Starbucks is not alone in this regard. Apparently even Mom and Pop coffeehouses are now discouraging wifi use during the day because online customers tend to linger. This is not a welcome trend. To sit in a coffeehouse working, or talking with a friend or reading a book – or, better, talking about a book with a friend — is to feel oneself a part of the civilized world.

On my way to a meeting in Chelsea the other day, I decided to stop at a Starbucks to see if I could discover any signs of Mr. Heydon’s Taylorist experiment. There wasn’t much of a line – a sign of efficiency? or of slow business? — so I stepped up to the counter and ordered what I always order at Starbucks: a double macchiato. What size? the clerk behind the counter asked. A double, I said. Oh, he said, a doppio. (But he said it like, dopey-o.) Yeah, a double, and please, just a dab of foam. He turned and communicated something inaudible to the young woman working the espresso machine. She looked confused. I don’t know how to make that one, she said. I guess she was just starting. Another woman came over and took her through it, and as she was doing that and I took my change from the clerk, I chimed in from my side of the counter: and not too much foam. Just a dab.

This certainly wasn’t going to be efficient: even if the woman at the espresso machine knew how to fill the order, I wasn’t going to let her do it without oversight, because I like my coffee just so. As do most people. In this instance, the rookie barista didn’t even come close to making the coffee I wanted. What I got instead of a caffè macchiato was a paper cup filled with foam, some espresso swishing around underneath.

When I asked if she could take some of the foam out of the cup, she looked confused. The woman who had been training her intervened, took one look at the foamy concoction, and said she’d make me a new one. But not too much foam, I said. It’s a macchiato. Macchiato. That means ‘stained’. The foam should just stain the coffee. Just a dab. I was starting to enjoy this. Meanwhile, over at the counter, something else was happening – something very small and seemingly insignificant, but in its own way, magical.

A woman holding a big cup of coffee approached the register and asked the clerk where she could find the nearest subway. This was way off script. But of course the clerk knew the subway system, and he asked what any New Yorker would ask: which train do you want? There then followed a long discussion about where the woman wanted to go, and which train would be best. Another customer standing near the register joined in. A conversation among strangers had started. The social had asserted itself, in a way it could only in New York City, at that particular juncture in the transit system, and now there was no way around it, no science that could streamline it or predict it, time it or script it. No way to manage it.

Mr. Efficiency

The business guru Jim Collins has a stopwatch – an impressive, digital stopwatch, judging from the picture of it in the New York Times.

His stopwatch keeps three separate times, a running tally of time spent on pursuits he labels “creative,” “teaching,” and “other.” Collins tabulates the readings of the stopwatch on a spreadsheet; then he posts the results on a whiteboard in his Boulder, Colorado office. His aim, he tells the Times, is to keep the creative pursuits (writing and exploring ideas) at or above fifty percent of his time, and to divide the rest of his time between his teaching duties at the University of Colorado and the managing of his small enterprise – which supports all the things Jim Collins does: writing business books about why companies succeed and fail, giving talks, and consulting.

Bravo, I would like to say. I know the vigilance required to keep other obligations from impinging on one’s creative work, and though I am not teaching right now, I aspire to a balance much like the one Collins has achieved. But then there’s that stopwatch, and the spreadsheets (Collins even logs his hours of sleep: he needs 70 to 75 hours every ten days), and I have to wonder just what sort of guru Jim Collins really is – or what religion he’s out to spread.

Adam Bryant, who wrote the profile for the Times, calls it “doggedness.” Collins takes an “exacting approach to time management and research,” Bryant writes, and lives according to a “method” he “borrows from other hypersuccessful people. He approaches every aspect of his life with purpose and intensity.” That’s certainly one way of putting it. But it misses an important point, and misses why I can’t bring myself to applaud or approve.

Bryant’s portrait of Collins is a study in what I would call ethical Taylorism. I think the coinage is sound and the label applies. Taylor, of course, is F. W. Taylor, the great grandfather of “scientific management” and management consulting. Peter Drucker, the guru’s guru, described Taylor as “the Isaac Newton (or perhaps the Archimedes) of the science of work.” In the time studies for which he’s best known, Taylor analyzed a bit of industrial work and broke down the actions required to perform it into hundredths of a second to look for more efficient ways to perform the action. He thought there could be a “science of handling pig-iron” and a science of shoveling (and, incidentally, that the pig-iron worker or the day laborer was too stupid to figure out the “one best way” to perform his appointed task).

Collins has turned his whole life into a Time Study. He has made a habit of efficiency – habit here in the Aristotelian sense of an ethical habit, a disposition or hexis. It is only fitting, I suppose, that this creature of scientific management should devote the “creative” work he so jealously guards from other obligations to questions of management theory — those are less likely than others to lead him to other obligations — but the real point here is a simple one: ethical Taylorism makes a virtue of efficiency. Or, to put it another way, it mistakes efficiency for virtue. (In this light, I have to wonder how ethical Taylorism might have played into the financial crisis, or how it might play into the impending business failure of the New York Times.)

The most popular expression of ethical Taylorism is probably Covey’s Seven Habits of Highly Effective People, a book nearly everyone professes to have read but hasn’t, because books like this are ultimately unreadable — and not ever meant to be read (because that would be a waste of time). It, too, is a celebration of the life efficiently lived, of effectiveness; the two Taylorist terms share an etymological root in the Latin efficere, and a philosophical confusion of human being with an efficient cause.

Or they both rely on an unphilosophical reduction: in this conception, human work is merely a means to an end, so it should be made as time-efficient as possible, and human beings are agents — no, merely agents who bring about an end, rather than ends in and of themselves. There is not much room here for human dignity, or true vocation, or even a sense of creative work as discovery and self-discovery. (The creative is harnessed to a regime of production.) I might go so far as to say that there is not much room here for the human aspect of human being; ethical Taylorism reduces the human being to an economic or industrial agent. Think of the business organizations that embody this ethos; think, too, about the politics that follow from this reduction.

Forget wonder. Focus, instead, on success, only on what works, on being highly effective, even “hypersuccessful.” With doggedness and luck (Collins attributes much of his success to luck), things might work out for you. But — win or lose — the real trouble with ethical Taylorism is that it offers (at best) an impoverished idea of virtue or human excellence. Eventually, you’d think, the human will rebel, or wander from the plan of “creative” work into unfruitful and unscientific speculation on his Creator, or nap. I certainly hope so.

More On My Social Entrepreneurship Twitter for @SocialEdge

It was an offhand remark, made in reply to a twitter from the Skoll World Forum. What we now call “social entrepreneurship”, I wrote in reply to @socialedge, should eventually just be business as usual.

If it hadn’t been an offhand remark, I might have put it differently. But that’s how conversations usually get started, online and off — a casually dropped remark raises more questions than one bargained for; interlocutors offer their own rough approximations, and (with luck) the thing goes forward, not necessarily toward resolution, but broadening its scope, picking up other questions, and inviting more people to participate. And since I’m not at the Skoll World Forum, where I could have this conversation in person, or with many people, I thought I would try to put together a few thoughts about what my remark was supposed to mean, what it could, or must, mean.

First, a little context. My exchange with @socialedge grew out of his coverage of a big theme at this year’s Skoll World Forum, on the teaching of social entrepreneurship. “‘Social entrepreneurship,” he wrote, “should be an adjective that describes entire business schools, not a department within them.”

It would be hard to take issue with the point, even if you are bothered by the fact that social entrepreneurship is not an adjective, even if you hold no brief for social entrepreneurs.

The current economic crisis has generated its own crisis of faith in, and within, the business schools, and MBA programs in particular. Business Week recently held a debate on the question whether “Business schools are largely responsible for the U.S. financial crisis”; and though that was meant to be a provocative statement, it’s actually quite guarded and misses the point altogether, because it confines the scope of the crisis to finance, when we are obviously witnessing a social and political crisis that arises from, or emerges in the form of, a financial crisis.

That is a point too often overlooked, even now: this is a political and social crisis as well as a financial crisis.

That it took a crisis of this proportion for Business Week and other business media to question the jargon-ridden theoretical twaddle and pseudo-scientific bombast that in many quarters passes for business education is astounding. It’s tempting to agree with Henry Mintzberg, Professor of Management Studies at McGill, who says that MBA programs teach only arrogance, and recommends that we “close them all down, period!” By and large, though, most people writing and talking about this subject are just hoping for a better way to go about things. And obviously the teaching of social entrepreneurship can help to re-orient business education, take it to the field, broaden its scope, and make it about something other, something more, than mere financials. (So, for that matter, can teaching history, languages, and philosophy; but that’s a subject for another day.)

This gets us closer to the heart of the issue, because the trouble is that “mere financials” are never really mere financials, and they are best understood from perspectives that business schools currently don’t, by and large, provide. Social entrepreneurs have a fresh perspective on this issue; and integrating that perspective throughout the business curriculum would require students and faculty to revisit, and re-think, the relationship between financial instruments and the human ends they serve, or business and society, in very broad terms. Teach social entrepreneurship and you teach not just concepts but context and contextual thinking.

It’s always good, in any conversation as well as any educational endeavor, to go back to basics. How business creates wealth; by what means, and to what end; what counts as wealth – these are all questions that social entrepreneurs must confront, in one way or another; and they confront them not as theoretical constructs or “case studies,” but as practical problems on which the success of their enterprise depends and which require an immediate and real-world solution.

Of course, our current problems extend far beyond the four walls of the classroom, and in the real world these basic questions have acquired a new urgency. And that, I suppose, is what prompted my offhand remark in the first place. Anyone who thinks that we are going to recover from this crisis and then return business to business as usual is suicidal, a sociopath, or not very bright.

Some on the right in America are ranting about socialism, or making dire forecasts about the United States turning into old Europe; but even they don’t have the faith or strength to advocate a return to the way we were.

Things are not going to return to normal. We are now entering “the new normal,” as Ian Davis puts it in the most recent issue of McKinsey Quarterly; and though Davis confines himself to a few boardroom bromides – capital outflows to Asia, less leverage, more government intrusion – he manages to hint that the old model of how business gets done, what business is, what business does, has run its course. It’s spent. The old normal has exhausted its social capital.

It won’t be enough for businesses to jump on the “social” bandwagon and preach “social responsibility” (too often a byword for lax regulation); and it’s a bad idea to demand that businesses effect “social change.” The past six months of Ponzi schemes, bank failures and bankruptcies, market dives, bailouts and rising unemployment numbers have proven, once and for all, that doing business always effects social change, and that social change is not a good in and of itself.

We now have a unique opportunity – or an urgent imperative — to rewrite the social charter of business and finance. Of course that’s not going to happen through some great constitutional convention held by some international body like the World Economic Forum (or the Skoll World Forum) or even through the backroom dealings of Tim Geithner, Ben Bernanke, and a group of their closest friends. Good policy can help, but real change is going to come about through entrepreneurial adaptations to new norms, trial and error, through a process of discovery, risk and failure.

And maybe that’s where the social entrepreneurs come in. Social entrepreneurial activity is now generating new ideas of wealth and how to create it, new kinds of credit and transactions and new business models, the likes of which the Fortune 500, with their industrial legacy, could never come up with. Why not, then, imagine that social entrepreneurial activity will eventually generate alternative models, or at least some useful guidelines, for how to scale, up or down, how to do mergers and acquisitions, where to make investments and to what end, how to effect meaningful, and sustainable organizational change, even how to have conversations about strategy or set governance?

And why not? Social entrepreneurs already remind us of what we should have known all along: that every enterprise has social consequences, intended and unintended, every business must raise social capital as well as investment capital, and every entrepreneur is a social agent, even if he’s got an MBA.

What Can Make You Soft?

A short while ago the bright lights at McKinsey and Co. announced that they had been thinking seriously about the role of business in society, and were prepared to go beyond the usual bromides about corporate social responsibility. An article by Ian Davis in The McKinsey Quarterly focused on the need for CEOs and other executives to wield “soft power” — which Harvard’s Joseph Nye describes as “the ability to get what you want by attracting and persuading others to adopt your goals.”

With carrots and sticks you can coerce people to do what you want; but carrots can get expensive and people resent too much stick. The soft leader takes a different and more subtle tack, entering into controversy to set or re-set an agenda, to frame the discussion, to gain credibility on an issue, and, above all, to lead by persuasion.

For Nye, whose book deals mainly with the exercise of American political power, soft is the road not taken by the Bush administration after 9/11 and in the war on terror. (If anything he is far too soft in his criticism on this point, but maybe he is just practicing what he preaches, persuading gently rather than berating and bashing.)

For Davis, soft power may not be the be all and end all of contemporary business leadership, but it’s an important ingredient. Though business leaders have been historically reluctant to enter into social and political discussions for fear of being compromised or caught up in controversy, Davis writes, they “are particularly well positioned” to exercise soft power on local, national and global issues.

Why? Partly because CEOs and other business leaders are used to dealing with “complex trade offs”; surely, Davis reasons, they can readily apply those skills to the “big social issues from climate change to health care to poverty. Business, particularly big business, has a vital role in resolving these immense challenges.” Not to mention a vital interest in directing the outcome of public debate.

You’d think that lobbying Congress, investing in some feel-good PR, and pulling the honeywagon up Capitol Hill would be enough. But it’s not. In an article in the Economist magazine, Davis makes the exercise of soft power out to be the fulfillment of a Rousseauist social compact; but it’s less a social obligation than a prudent calculation, to be involved in real world issues, risking some public controversy, perhaps, but in the long run putting oneself in a better position to manage risk.

The thinking here is that by directing social and political change, or at least having a hand in it, you will be better positioned to anticipate it, exploit it, profit from it, turn it to your advantage. That all sounds very compelling — as long as you don’t worry too much about the tendency of history to take unexpected turns. Still, it’s worth considering how many times an unforeseen twist, or an unintended or unanticipated consequence, has undone even the best generals, politicians, diplomats, revolutionaries, dictators, bosses, organizers and televangelists.

Enter at your own risk. My main concern is this: how do you learn to wield soft power? Where do you learn how to exercise it? Who teaches soft skills? For the ancient world, there were schools of rhetoric to teach the art of soft power or persuasion. In the early modern and modern worlds, there were schools of liberal arts. But where do you learn those arts now?

Certainly the business schools are ill-equipped to teach rhetorical prowess and the practice of soft power in any real way; language and constructive use of language (in dialogue, in persuasion), the ability to translate, literally and figuratively, among different languages or different ways of seeing the world, the ability to parse a conversation or to frame a conversation at the outset, to place events and people and positions in historical context so as to better understand them — all this requires a kind of patience and diligence that has not exactly been institutionalized in our MBA programs.

So what about the liberal arts? What about the humanities? Can they make softer leaders? Maybe. If the deliberate and careful study of language, history and language arts has an important social and civic function, it surely must be something like this.

But it’s the rare CEO who has spent much time studying the humanities, except to fulfill a set of requirements or to play at business ethics; and, what’s worse, it’s the rare humanities program or humanities curriculum which thinks that its business is to teach anything practicable in the practical world. Teaching “critical thinking,” as many humanities programs claim to do, may be a start, but when thinking is captive to a particular cultural and political agenda, as it too often is, it ceases to be critical; and learning to use theoretical jargon is no substitute for learning how to parse a sentence in Latin or Russian or French — or English, for that matter. Grammar always trumps theory.

Peter Drucker was aware of this deficit in our educational system. In Managing in the Next Society, Drucker saw the need for a third way — a way in between the mix of practical education and new age sophistry of the business schools on the one hand and the narcissism, self-destructiveness, and ethical irresponsibility of liberal arts programs on the other. In the meantime, those who want to soften themselves up to lead in the real world will have to be autodidacts, or — more likely — flush with money to hire people who know how to institute softness. And that is the rarest kind of business consultant. It’s a hard world out there.